The Tax Rate on Capital

March 22, 2016

Globalization and capital mobility are increasing tax competition among countries. Lower tax rates increase after-tax returns to capital, raising economic growth rates. They can also make economies more attractive for foreign investment. Despite this, the United States has the highest corporate tax rate in the developed world at a top rate of 35 percent. When including both federal and state corporate taxes and additional capital gains and dividends taxes, the marginal tax rate in some industries tops 56 percent. Perhaps it's time to do what the United Kingdom just did and cut our corporate tax and capital gains tax rates.